Consider the three small mutually exclusive investment alternatives in the table below. The feasible alternative chosen must provide service for a 10-year period. The MARR is 12% per year, and the market value of each is 0 at the end of useful life. State all assumptions – (Use repeatability and co terminated) you make in your analysis. Which alternative should be chosen? Use the imputed market value technique in alternative C, ɛ = 10% - A B Capital investment $2,000 $8,000 $20,000 Annual revenues less 600 2,200 3,600 expenses Useful life (years) 5 10
Consider the three small mutually exclusive investment alternatives in the table below. The feasible alternative chosen must provide service for a 10-year period. The MARR is 12% per year, and the market value of each is 0 at the end of useful life. State all assumptions – (Use repeatability and co terminated) you make in your analysis. Which alternative should be chosen? Use the imputed market value technique in alternative C, ɛ = 10% - A B Capital investment $2,000 $8,000 $20,000 Annual revenues less 600 2,200 3,600 expenses Useful life (years) 5 10
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Use PRESENT WORTH. Show complete solution and cash flow diagram.
Transcribed Image Text:Consider the three small mutually exclusive investment alternatives in the table
below. The feasible alternative chosen must provide service for a 10-year period.
The MARR is 12% per year, and the market value of each is 0 at the end of useful
life. State all assumptions – (Use repeatability and co terminated) you make in
your analysis. Which alternative should be chosen? Use the imputed market value
technique in alternative C, ɛ = 10%
A
B
Capital investment
$2,000
$8,000
$20,000
Annual revenues less
600
2,200
3,600
expenses
Useful life (years)
5
10
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